* Once a small Fall River thrift, today FirstFed America Bancorp is a $2.7-billion financial services company that is outpacing its peers.
* * *
SWANSEA – There’s nothing particularly impressive about Swansea Mall Drive. It’s your typical suburban commercial strip, featuring national chain stores, local mom-and-pops, and left-hand turning lanes.
But to some on Wall Street and to many local investors, Swansea Mall Drive may start to resemble a road to riches.
Because perched on a gentle rise next to the mall is the home of one of the past year’s best-performing U.S. bank stocks.
FirstFed America Bancorp, once a small Fall River thrift, has rewarded shareholders with a 55-percent gain in stock price since the beginning of the year. It’s a run-up that is more than double those of its peers in the banking industry.
On top of that, the company has raised its quarterly dividend three times in the last year, boosting it more than 73 percent.
A key purchase at just the right time helped drive FirstFed’s strong performance. The acquisition of People’s Bancorp early last year gave a substantial boost to FirstFed’s mortgage operation just as low interest rates fueled a refinancing boom.
The company posted a 41-percent rise in quarterly earnings for the three months ending June 30.
Just yesterday, FirstFed shares hit an all-time high of $19.50 before falling back to close at $19.25, up 25 cents from Tuesday. That all-time high takes into account a 2-for-1 stock split two weeks ago.
One hundred FirstFed shares bought for $1,000 when the company went public in early 1997 are now worth $3,850, not including dividends.
“This is a great story,” proclaims Robert Stoico, the chief executive responsible for FirstFed’s transformation.
Shareholders at the company’s annual meeting today at The Westin Providence hotel will get their chance to say whether they agree. They range from a Manhattan hedge-fund manager who controls a $30- million stake to small local investors who bought as few as 25 shares in 1997.
“We made sure a lot of the stock made it into the hands of local people,” Stoico said in an interview at his office earlier this week.
FirstFed employees own a 7-percent stake in the company that is worth $24 million. A FirstFed charitable foundation created during the conversion to a public company owns $23 million. The foundation makes annual donations to local charities equal to 5 percent of its assets.
Stoico’s stake in the company is worth more than $18 million.
A former accountant who audited the bank’s books, Stoico, now 63, took over as CEO in 1977 at age 36, five years after being recruited. At the time, the bank had one branch, 31 employees and $65 million in assets.
Today, it is a $2.7-billion financial services company with 815 employees and more than 40 locations in four states, including bank and insurance branches, trust company offices and loan origination centers.
It operates 19 bank and insurance offices in Southeastern Massachusetts and 7 more in Rhode Island. Its People’s Mortgage subsidiary operates in both states, plus Connecticut and Maryland.
FirstFed’s roots go back to 1946, when it was established as First Federal Savings and Loan Association of Fall River. In 1982, it merged with First Federal Savings and Loan Association of Attleboro.
The merged institution became a federally chartered savings bank in 1983 and changed its name to First Federal Savings Bank of America. It was a mutual institution owned by its depositors.
When it decided to go public, longtime depositors had first crack at buying shares for $10.
On its first day of trading, FirstFed shares closed on the American Stock Exchange at $13.625 a share, representing a one-day gain of 36 percent.
The stock climbed steadily during the first year of trading, but then it fell back in 1998 and remained stagnant before starting to climb again in late 2000.
The consistent rise has started to garner attention for FirstFed beyond Southeastern Massachusetts and Rhode Island.
The magazine Fortune Small Business recently named FirstFed one of the 100 fastest-growing small companies in the United States, ranking it number 65.
A small pack of analysts is also covering the company closely.
A recent report by the investment bank Friedman, Billings, Ramsey & Co. gave FirstFed a hold rating, citing its strong mortgage operation. But FirstFed shares have already exceeded the $18 price target set in the report.
FirstFed’s strong financial performance, and general merger trends in the banking industry, inevitably lead to speculation about whether someday Stoico may decide to sell to a larger institution.
According to Friedman, Billings, Ramsey, more than 60 percent of the U.S. thrifts that converted from mutual to public ownership since 1990 have been sold to other banks. The average span between the initial offering and the acquisition announcement is 3.6 years.
Asked whether he would consider selling FirstFed, Stoico responded, “Our plan is to remain independent.”
He said also that he has no intention of retiring and that he hopes to continue opening more branches, particularly in Rhode Island, and make additional acquisitions.
But like the CEO of any publicly traded company, Stoico has a fiduciary duty to listen if anyone comes calling with an enticing offer.
“Whatever strategy option is in the best interests of our shareholders, we’re going to take,” he said.
* FIRSTFED IN 2003
CHART – SEE MICROFILM
SOURCE: BLOOMBERG
* * *
* RISE TO THE TOP: Robert F. Stoico is a former accountant who once audited the books for FirstFed. He became CEO in 1977 at age 36, and his stake in the company is now worth more than $18 million.
JOURNAL PHOTO / FRIEDA SQUIRES
